Talking to the Chief of Yelp, the Site That Businesses Love to Hate

Jeremy Stoppelman, a Yelp co-founder and its chief executive, at the company’s headquarters in San Francisco. Credit
Peter DaSilva for The New York Times

Yelp! What happens when an online review site itself becomes the subject of harsh public scrutiny? Such is the case of Yelp, the review site that carries the motto, “Real People. Real reviews.” In recent weeks, Yelp has been hit with three class-action lawsuits from businesses claiming that Yelp sales representatives tried to press the businesses into advertising by offering — or threatening — to manipulate reviews. Jeremy Stoppelman, a Yelp co-founder and its chief executive, has seen the tables of Web 2.0 turned against his company as angry business owners have taken to Internet boards to pan Yelp. A condensed version of a conversation with Mr. Stoppelman follows.

Q.Class-action lawsuits have been filed that accuse your company of extortion. Do you extort people?

A. Absolutely not. The way Yelp works is very counterintuitive to a lot of folks, which is the source of the problem. In 2005, we created a review filter. It’s automated and algorithmic and screens out certain reviews that it just doesn’t know enough about. When a consumer encounters a business’s page, the reviews they’re seeing aren’t necessarily every review that’s been written about the business. It’s a selection of those reviews. It ensures that the consumer sees generally useful, trustworthy information that gives them a good idea of what to expect when they patronize that business.

Q.How does the filter determine whether a review is trustworthy?

A. We’re looking at a variety of factors, collecting all sorts of data on the users that have contributed reviews. I really can’t be very specific. The more that we explain about the algorithm, the less effective it becomes.

Q.Why do business owners sometimes see reviews come and go without any obvious cause?

A. If it’s happening all the time, chances are you’re soliciting reviews — asking customers or friends to write reviews. This is a practice we openly discourage. It’s unfair to your fellow business owners and potentially unfair to consumers who might get the wrong idea about your business. There’s a flip side: how do we protect businesses against malicious reviews? The coffee shop across town doesn’t like you or is very competitive and wants to write negative reviews to pull down your ranking. We’re trying to catch that and remove it automatically.

A. The very clear answer is yes, given that so many consumers have had positive experiences and continue to use the site today. I don’t think we would have lasted five years if we didn’t have the filter.

Q.. Some critics have compared becoming a Yelp advertiser with “buying protection” from the Mafia. Is there anything you do for an advertiser that gives protection?

A. Absolutely not. There is this conspiracy theory being perpetuated by these businesses and then through the media that somehow the review filter is linked to our sales reps or that sales reps have any control, “Oh, we can make this review go away.” Absolutely not. The review filter is automated. It doesn’t take into account advertiser status. It works the same for everybody.

Q.If nothing else, do you think you have a public relations problem?

A. There’s simply anger over the accountability that Yelp brings and also this feeling of powerlessness because so much power is now being put in the hands of the consumer. But the important thing that gets lost with some of these business owners who are very upset with us is it’s the whole picture that counts. Focusing on that one review you feel is unfair misses the value, which is the whole symphony of opinions you get on your page.

Q.. Do you wish you’d done anything differently in explaining Yelp to businesses?

A. We’re hearing the frustration and confusion. We’ve stepped up our efforts in local business outreach in a huge way. We have a manager who now spends almost all of his time going to events where there are a lot of local businesses. We want to be there to help explain how the site works, how it can be helpful and the free tools.

Q.Do advertisers get tools for dealing with nasty comments that nonadvertisers don’t?

A. Every business owner can unlock their page and tap into free tools, including being able to privately or publicly message their customers. They can even put special offers up on their page that get broadcast to other parts of the site for free. It’s simple to unlock. There’s no cost. There are so many businesses that are succeeding on Yelp that don’t pay us a dollar, and we’re really excited about that.

Q.So what’s the incentive to advertise on Yelp?

A. The primary thing our advertisers are purchasing is actually advertising. Depending on what your price level is, you get a certain number of impressions of those ads, both at the top of search and on related business pages. So if you’re an Italian restaurant you might show up on a pizza restaurant page or another Italian restaurant page. Beyond that, there are also a couple of enhancements that happen on your business page. You’re buying out that ad inventory that would otherwise be on your page. You get a slide show so the photos on your page are a little bigger and rotate. You also get to highlight one review, which is clearly marked as your favorite. That’s it.

Q.Does the venom directed toward you personally give you any empathy for a restaurateur or retailer who gets nasty reviews?

A. Clearly there is an analogy there. But I would say I take my own advice. I’m able to see the big picture. I stay focused on the fact that consumers love it.

Q.Have you ever thought to yourself, I’m the most hated man in small business?

A. You can’t really feel that way if you have 30 million consumers visiting you every month. I meet business owners all the time, and the reality is they’re not all angry. The ones who are calling lawyers or calling the media are upset, but that’s not necessarily a representative sample. For perspective, it’s important to remember that there are up to 15 million businesses that you can find on Yelp and 10 million reviews. We have tens of thousands of advertisers. We have some lawsuits from a handful, I think 12, local businesses. In the grand perspective, it’s really a drop in the bucket.

Q.Has Yelp ever made a profit?

A. There were a few months when we slowed our expenses during the depths of the recession and became cash-flow positive. But as things stabilized, we started investing again, and so we’re not profitable right now. We have a lot of faith that our model will allow us to become profitable sometime within the next few years.

A. We can’t comment about any conversations we may or may not have been having in the past. Recently we did complete a financing with Elevation Partners that allows us to remain independent, and we’re really excited about growing the company independently in the years to come.

Q.If you sold Yelp, what would you do next?

A. It’s hard to imagine a scenario where that happens in the near term. I’m very much committed to seeing Yelp through for a very long time.

Q.So you won’t be opening a restaurant any time soon?

A. Yeah, I don’t think I’m going to be opening any local businesses.

A version of this article appears in print on March 25, 2010, on page B9 of the New York edition with the headline: Talking to the Chief of Yelp, the Site That Businesses Love to Hate. Order Reprints|Today's Paper|Subscribe